Millions of people in Nigeria have little or no electricity. It is overloading companies and public services

IBADAN, Nigeria (AP) — Dimly lit and stuffy classrooms bustle every morning as children file in. The sun’s rays enter through the wooden windows, the only source of light. Students squint at their books and, intermittently, at the blackboard as teachers try to hold their attention.

It is a reality for many school children across Nigeria, where many buildings do not have access to the national electricity grid. At Excellent Moral School, Olodo Okin, Ibadan, “the entire community is not connected, including the school,” said the school’s founder, Muyideen Raji. It seriously affects students, he said, who cannot learn to use computers or the Internet and cannot study at night.

About half of Nigeria’s more than 200 million people are connected to a national electricity grid that cannot provide enough daily electricity to the majority of people connected. Many poor rural communities like Olodo Okin are completely off the grid.

In a country with abundant sunlight, many look to solar energy to help fill the gaps, but getting risk-averse investors to finance large solar projects that would give Nigeria sufficient, reliable power is an uphill struggle. It means that millions of people in the country are finding ways to live with little or no electricity.

Lots of sun, few funds

Studies have shown that Nigeria could generate much more electricity than it needs from solar energy, thanks to its powerful sunlight. But 14 grid-scale solar projects in the northern and central parts of the country, which could generate 1,125 megawatts of electricity, have been stalled since contracts were signed in 2016.

Those trying to develop solar projects in the country blame interest rates on loans, which can reach 15%, two to three times higher than in advanced economies and China, according to the International Energy Agency.

This means it is more expensive for solar companies to work in Nigeria or other developing countries than in rich countries. Africa has just a fifth of Germany’s solar power capacity, and only two% of global investments in clean energy go to the continent.

“The same project presented in Nigeria and Denmark; the Danish project will receive financing with an interest rate of 2 to 3 percent, said Najim Animashaun, director of Nova Power, one of the stalled solar projects. Meanwhile, he struggles to obtain loans, even at interest rates of 10 percent or more, “even though my solar project can produce two and a half times more energy” than a Danish project.

Nigeria also does not set so-called cost-reflective tariffs, which means that the price consumers pay for electricity does not cover the costs of producing and distributing it. This means that distribution companies cannot pay producers in full and the industry relies on government interventions to stay afloat, deterring creditors from investing in the solar industry.

Currently, energy producers say the government owes them up to 3.7 billion naira ($2.7 billion), making it difficult for them to meet obligations to their creditors and contractors.

One option would be to get guarantees from the World Bank that would reassure investors and make them more willing to invest money in solar projects – but the government is wary of signing anything that would force them to pay large sums, even if the electricity from the projects doesn’t arrive. to consumers due to inadequate transmission and distribution infrastructure.

But without guarantees from the World Bank, “no one will develop or finance a project with government subsidy, because it could dry up,” said Edu Okeke, general manager of Azura Power. Azura Power has a stake in the now-stalled 100-megawatt Nova solar project in Katsina state in northern Nigeria.

Interim solutions

With less than 8,000 megawatts of capacity and an average supply of less than 4,000 megawatts – less than half of what Singapore supplies to just 5.6 million people – power cuts are a daily occurrence in Nigeria.

Communities like Excellent Moral School in Ibadan that do not have access to electricity are often surrounded by more fortunate communities that are connected to the grid but suffer frequent outages and have to use private gasoline and diesel generators.

With the long duration oil subsidies now removedMany families, schools, hospitals and businesses struggle with the cost of fuel for their backup generators.

“We have stopped using a diesel generator as an alternative due to costs,” said Abdulhakeem Adedoja, principal of Lorat Nursery and Primary School in Ibadan. He added that although the school is in an area of ​​Ibadan connected to the grid, they could go without power for two weeks.

The problem is not only the lack of electricity for computer-assisted learning, adequate lighting and fans to make classes less stuffy for students and teachers, but also the fact that students are unable to complete their schoolwork at home, Adedoja said .

For small businesses with greater energy consumption, such as restaurants, they close their doors or continue with alternative energy production, incurring high costs that hinder their ability to expand.

Ebunola Akinwale, owner of Nature’s Treat Cafe in Ibadan, said she pays 2.5 million naira ($1,700) monthly to power backup generators at her four branches.

“If nothing changes, I will probably have to close a branch or two,” she said, although she is planning to switch to solar energy, which she is excited about will help us reduce “pollution from diesel (generators).” She is in negotiations with her bank for a low-cost loan package specially designed for young female entrepreneurs to finance the solar alternative.

However, not all businesses and families have this access or can afford the initial capital for a private solar system. School principals Raji and Adedoja said they found the costs prohibitive.

Finding a way forward

Stalled solar projects are not happening because finances are not rising, but even for other sources of electricity production, Nigeria struggles to attract desperately needed private financing.

The Minister of Energy, Adebayo Adelabu, he said in May that, to face the financial crisis affecting the electricity sector, prices must reflect the true costs of the service, because a bankrupt government cannot afford to pay 3 billion Naira (2.4 billion dollars ) in subsidies.

The government also insists that full payment for the electricity consumed by Nigerians would encourage investment in the sector.

Was there any throwback for this, as the unions continued beat in early June, in part to protest electricity rate increases.

But businesspeople like Akinwale understand the government’s position because electricity supplied regularly from the grid, even without subsidy, is “still cheaper and cleaner” than diesel for generators, she said.

If financing for grid-scale solar projects does not increase, the government should offer incentives such as tax benefits and payment plans to encourage private adoption of solar energy, Akinwale said. “Sunlight is there in abundance,” she said.

Former regulatory chief Sam Amadi doubts that consumers in Nigeria – where the minimum wage is 30,000 naira ($20) a month – “can today pay for the energy consumed without subsidies”. He also wants a policy that makes smaller-scale solar projects spread across communities, businesses and homes more accessible.

Until then, there are consequences to the frequent blackouts, he said.

“I have a story of a person who died in the hospital because the electricity went out during the operation,” he said. “Every day, we see the real-world effects of electricity outages.”

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